Digital Gas Agrees to Acquire Gas Subsidiary of SunWest Petroleum Inc. for $15.75 Million

Business Wire, June 4, 2004

Energy Editors/Business Editors

NEW YORK--(BUSINESS WIRE)--June 4, 2004

Digital Gas, Inc. (OTC Pink Sheets: DIGG) -- Digital Gas, Inc. and SunWest Petroleum, Inc. of Dallas, Texas, have entered into an agreement whereby Digital will purchase SunWest SEK LLC, which contains producing gas wells, pipelines and a gathering system, as well as other highly prospective drillable acreage and assets in the Midwest, from SunWest for $15.75 million.

Digital Gas will submit final documentation to its financial agents as soon as several new wells have been completed and put online and it receives an updated engineering report on the approximately 10,000 acres owned by SunWest. At closing, Digital Gas anticipates having just fewer than 40 producing coal methane wells with a total gas production of in excess of 2.5 Mcf (thousand cubic feet) per day. An additional 125 wells could be drilled and put online on the remainder of SunWest's property. Gas is currently selling for $6.50 per Mcf in the area.

Under the terms of the agreement, Digital Gas can request that SunWest drill, log, pipe-set and cement 25 additional wells in certain highly prospective existing acreage included in the deal. It is anticipated that the additional wells, which Digital Gas would pay for and own, could add in excess of 1.56 Mcf per day. The additional 100 wells to be drilled on the property are projected to produce in excess of 6.25 Mcf per day. Totally drilled, the property is anticipated to produce in excess of 10.5 Mcf per day. Although management expects these production numbers, there is no guarantee that the future wells will perform as those currently producing for SunWest at a rate in excess of 75 Mcf per month.

Digital Gas, which is currently in negotiations to purchase other gas assets and companies, anticipates raising $25 million of debt financing with a ten-year term to pay for the purchase price of this acquisition, the development of the 125 wells and for working capital. At closing Digital Gas will pay SunWest $10.75 million in cash and 1 million shares of its common stock at an accepted value of $5.00 per share.

Digital Gas intends on placing the assets into Digital Energy & Farming and eventually convert the operation into an electric company by building solid oxide fuel cell (SOFC) plants at a main gathering system which will then convert the gas into electricity and heat. Management anticipates that this will increase gas revenues by a minimum of 300% based on selling the electricity at just $.07 kw. The utilization or sale of the heat will increase revenues further still. Digital Energy & Farming may apply for a listing on the AMEX through the agency of an investment banking firm after the closing of this transaction and before the 125 wells are fully completed.

For further information: call Brian Smith (732) 927-4073 or email energei@optonline.net